Pick the Right People

These days, employees are more strongly committed when you hire selectively and develop continuously.

Under the new employee-commitment deal, it’s becoming increasingly important to employ the right people from the start. Who you pick to work for your company -- and who picks you -- matters more than ever because, like a marriage, basic compatibility is the basis for commitment. Employers aren’t the only ones who care about the employee investment. Employees increasingly are looking at who their team members are, how you develop and train them, and what opportunities you provide them.

Workers look at the other guy’s skills.According to the 1998 America @ Work (SM) study conducted by Aon Consulting Worldwide Inc., an HR consulting firm based in Chicago, two of the three best predictors of employee commitment include the extent to which employees believe their co-workers are receiving adequate training, and employees’ perceptions of how well their co-workers’ skills are keeping pace with job demands. On average, respondents to Aon’s survey believe that about 40 percent of their co-workers have skill levels that fall short of what their jobs require. These results are generally consistent among workers with varying lengths of service and in organizations of different sizes. Workers in medium-sized organizations appear to be the most concerned with the adequacy of co-worker skills. Why are workers so concerned about what their peers are doing? The fast pace of work and workplace change has increased the demand for skills faster than the labor market can deliver.

“The reason that translates into importance for selection and assessment is that people want to work on a winning team. And if they believe the HR team is choosing and hiring people who don’t have the skills or attitudes the team needs, people are going to think about going elsewhere to work,” says David L. Stum, president of The Loyalty Institute (TM), an Aon Consulting Worldwide division based in Ann Arbor, Michigan. Even still, employees are generally more committed to their individual team, their boss and their projects than they are to the bigger organization. With the complexity of most organizations these days, workers latch on to the people they see and work with every day. “My director left the company, so there was no real reason to stay,” says one employee anonymously. And another adds: “I am loyal to the people I work with and don’t want to let them down. Changing management and reorganizing groups lowers my loyalty and my performance.”

The right fit saves time and money. “Getting the right fit is crucial for the employer and the employee,” says Jim Krefft, a senior vice president for Six Sigma Qualtec, a consulting firm based in Scottsdale, Arizona. Job fit is the degree to which the candidate’s cognitive abilities, interests and personality dynamics fit those required by the position.

“When the fit’s right, it’s energizing.” On the flip side, when the fit’s wrong, it’s costly. Says Krefft: “We’ve got a financial-services client who says if it makes a hire [that doesn’t work out], the total cost for the first year is $1.5 million.” That’s a big-bucks boo-boo by any standards. And these types of big financial losses are confirmed by the Santa Clara, California-based Saratoga Institute, a human capital performance research organization, which has done studies that show a company loses about $1 million with every 10 professional and managerial employees who leave the organization.

Winning vision usually translates into greater employee commitment. But employees want to be invited to ride the train, rather than stand on the sidelines watching it go by.

For HR, the old paradigm of hiring 20 people with the hope that the best five work out is gone. It’s too expensive, and employers don’t have time for it. “As we move more into an environment where information and service are the dominant products in the marketplace, the human asset is all the more critical,” adds Krefft. “It’s often what’s between the ears of a firm’s deal-makers that enables the enterprise to succeed.” Krefft quips that he has one client who says their assets walk out the door and go home every day. For an increasing number of employers, that’s no joke.

That’s why employers have to get smarter upfront about what their goals are and the kinds of people, skills, competencies and behaviors they need to fulfill those goals. Don’t make a bad hire, then try to fix it later. “One thing that hasn’t changed is that you still aren’t going to make a silk purse out of a sow’s ear,” observes Krefft.

First, learn how to hire the right people.Finding people who fit your organization is a complex task. It pertains to selecting those people who resonate with you on values, vision and mission, those who are competent to work in the jobs and roles you have available now (or ones you may create in the future), those who want to work within the scope of their highest potential and those who have the ability to learn quickly.

According to Krefft, being able to find people who fit starts with retooling your recruiting and hiring process. Human resources professionals have to clearly define what’s required for success in your organization, then have a selection and interview process that precisely determines that you know the right person when you see him or her. Krefft strongly suggests using a competency-based selection process.

One process that Krefft frequently uses draws on empirical data from an organization’s past performance, strategic direction and core business processes, then distinctly outlines what a successful performer looks like for your company. Then through behavioral interviewing, you can sift through candidates to find a perfect match. Behavioral interviewing is the format of getting people to tell you stories about their work history and how they behaved in a variety of situations. Instead of the traditional approach (“If you were a tree, what kind of tree would you be?”), the behavioral approach illuminates abilities and experiences that give you a holistic picture of how an individual works (“Tell me a story about how you succeeded on a given project”).

Of course, using new procedures such as these causes a chain reaction. Supervisors and managers all the way up and down the organizational line need to learn how to use the new system. “It’s an enormous investment,” says Krefft.

Development opportunities are the new brass ring for workers.According to Perry Christensen, former director of work/life programs at Whitehouse Station, New Jersey-based pharmaceutical giant Merck & Co Inc., the firm’s managers are no longer judged by number ratings, but “on whether or not they’re utilizing their workers in the best way, and whether they’re developing their people.” Developing people is the new mandate for employers. It’s a no-brainer; if people are now the most important asset of an organization, the more they know and the better their skills are, the better their output will be. But the cry for development is also largely being driven by employees under the new employee relationship.

According to Boston-based Towers Perrin’s “1997 Workplace Index” study, employees want more of a “shared destiny.” Towers Perrin is an international management consulting firm that tracked the attitudes of 3,300 employees in 1995 and 2,500 employees in 1997 who were working in U.S. companies with at least 500 employees. The shared destiny means development opportunities and skill building for many different workers.

This is already the case in several industries, especially those that depend on young, highly skilled professional and technical employees, such as information technology experts. Many workers in these fields wouldn’t dream of staying with one firm for a lifetime. Says Gary Beisaw, director of ShopLink Inc., a personal services company in Westwood, Massachusetts: “In this tight job market, loyalty has taken a back seat as people are more opportunistic. People are more short-term focused.”

However, workers do insist on sharing in the success they help create for their companies while they’re employed there, such as equity ownership, a stimulating work environment, availability of “hot” projects and skill-enhancement opportunities. For example, Intel Corp. based in Santa Clara, California, spends an impressive 6 percent of its total payroll -- $160 million last year -- on its in-house university, and all senior managers must do a teaching stint there every quarter.

But such efforts aren’t cheap. Gardena, California-based Nissan Motors Co.’s vice president of communications, Jerry Florence, says the cost to hire, train, develop, increase and expand the skill of Nissan employees is in the ballpark of $1 million -- but it’s what people want these days. Because the new employment deal comes with the mutual understanding that workers aren’t going to be tied to a firm for life, they’re more involved in driving their own career development. They want to be marketable wherever they go.

As Arian Ward, leader of collaboration, knowledge and learning for Hughes Space and Communications Co. based in El Segundo, California, puts it: “Help people learn to keep one foot in the future and one foot in the present.”

HR’s role is to support teamwork and employee development.HR’s role in this area involves moving away from what Dave Ulrich, business professor at the University of Michigan in Ann Arbor, calls “the transactional role” -- the cops and clerks -- and transforming into the enabling force around the creation of the optimal human performance system. Employees increasingly are looking to their employers to create and uphold a learning environment in which teams can be the best they can be -- supplied with the right people, the right development and the right career opportunities.

“What’s making people stay these days is having interesting work in a nurturing, pleasant environment,” says Mark Meltzer, a senior VP and National Practice Leader for the Executive Compensation Practice at The Segal Company, an HR consulting firm based in New York City. “It’s all motivated by people figuring out ways to enhance themselves in terms of them getting more pay, making themselves more valuable to the company, and getting training and mentoring.”

Employees are now looking at companies to meet developmental needs. But it’s a big issue for companies, too. A survey conducted last year called “Dream Team -- Learning From Success” by the Scarsdale, New York-based Work in America Institute Inc., found that 95 percent of the respondents -- from nearly 100 of the most innovative companies in America -- gave the highest priority to “teamwork,” creating and sustaining team-based organizations. Teamwork ranked ahead of such critical issues as compensation, organizational change, performance management, training, labor-management relations, and recruitment and retention strategies.

The challenge for HR and your organization is to provide a learning and development environment that meets both the organization’s needs -- and employees’ demands.

Workforce, November 1998, Vol. 77, No. 11, pp. 50-52.

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